Nobody likes to think about dying. There is enough to worry about in life without having to stress out about dying. Remember that death is inevitable and everyone needs to plan for it. If you don’t have a will, you can cause many problems for your loved ones. However, if you make plans in advance, you will ensure that your money and assets go to the people you care about. No matter how old you are or how much money you have, you should take the time to plan your estate. Keep in mind that estate plans often include a will, an assignment of a power of attorney, and a trust.
If you are debt-laden, your loved ones still need to know how you want your estate to be handled, and if you don’t hire an estate planning attorney, there will be a lot of chaos and confusion after you die. Estate planning isn’t just about distributing your money. If you do not have a will, your family can be left responsible for your debts. Your loves ones can end up having to pay for your funeral costs without being reimbursed for many years.
If you are living with someone or married, the experts recommend that you discuss your wills together. If you’re living with or married to someone who owns the house and there aren’t any arrangements to let you stay there after that person dies, you can be evicted. On the other hand, if you are getting divorced, make sure your partner’s name is removed from your bank accounts, insurance, 401K account, and credit cards.
Most people don’t want to think about the inevitable because it can be scary, but you need to take the matter into your own hands for yourself and the people you care about.
The goal of a viable estate plan is to distribute your money and assets where you want them to go after you die, to make sure your loved ones don’t have to pay taxes on your inheritance or pay off your debts, and to ensure that the people you trust will be able to manage your affairs if you are sick and unable to make decisions.
Remember that if you die without planning your estate, the state will decide which of your family members get your money and assets. This can have messy consequences when it comes to the distribution of assets and child custody issues. That’s why it is so important to hire an experienced estate planning attorney. An estate planning attorney can also give you legal advice about any issues that you are concerned about. It is essential that you trust your estate planning attorney and seek advice before you create a will and sign any documents relating to a power of attorney of your estate. Please remember that no matter what your net worth is, it is essential that you create a basic estate plan. This will ensure that your family is well taken care of.
For many, the idea of creating an estate plan is something they’ll do “later.” As in when they’re older, when they have more “stuff” or whenever they have some time to actually sit down and do it.
But putting off creating your estate plan isn’t a good idea, and I’ll tell you why.
Funerals can cost a pretty penny these days so even college students who live at home and have very few assets should at least have a life insurance policy to cover funeral expenses. If you own a car or a baseball card collection or a diamond ring and everyone owns “something”, someone will have to inherit that property. And if you’ve got ideas about who you’d want your belongings to go to, you need a Will to ensure your wishes are honored.
As you get older and start accumulating assets, you’re effectively creating an estate that will have to be distributed. Even the most modest estates will have to be probated and if your assets can’t cover your taxes and outstanding debts, your family may end up inheriting nothing at all.
Do you have a family? Ensuring that your loved ones are protected and provided for is a key component of a good estate plan. Your plan can set aside money for debts and ensure that your kids can go to college or that your spouse can pay off the family home. Without a plan, your family may be left with a mountain of debt and no real resources to pay it off.
Do you have family heirlooms that you’ve promised to a specific someone? A Will or Trust would ensure those heirs receive that property but without a valid plan, the state has the honor of deciding who gets what and that may or may not be in line with your wishes.
Of course, these are just a few of the reasons you need an estate plan and exactly which documents you’ll need will depend upon your individual goals. The best way to ensure that your assets and loved ones are fully protected is to consult with a professional estate planning attorney. Some now associate the word “probate” with the twin evils of expense and delay. Many conclude that probate is “bad,” but may not have any idea why this is so, or even what exactly probate is. Simply stated, “probate” is a court-supervised method of transferring property and compensating creditors after death. In Utah, for instance, there are two main methods of communicating one’s wishes for disposition in a court supervised probate proceeding. The first is through a properly witnessed and executed will. The second method is through a “holographic,” or handwritten will (although, not all states offer a holographic will). To be valid, both types of wills have specific requirements, the details of which are beyond this article.
One myth many have is that a person’s assets will always go “to the state” if he or she dies without a will. This is false. The “intestacy” statutes provide for specific property dispositions in the absence of a will — however, these dispositions may not reach the desired result. For instance, in Utah should a wife with two adult children by her husband die, the husband would by definition already own one half (1/2) of the community interest of the entire estate. Under the intestacy statutes, the husband would also receive one half (1/2) of the wife’s community share (now, giving him a grand total three fourths’ (3/4ths) share of the total estate of both) and the two adult children would split the remaining one half (1/2) of their mother’s assets. However, this may not be the best: If the children are stingy and well-off adults, the wife might have wanted her entire estate to go to her surviving husband.
Another myth is that probate estates always go on endlessly, and are always horrendously expensive. While estates can be time consuming and expensive, most can be handled in months, depending upon the complexity of the estate, the number of creditors, and other factors such as the tranquility of family relationships. On the other hand, there is certainly truth to the criticism that probate estates can be lengthy affairs. Also, probate estates can take additional time if there are complicating circumstances like (for example) the heirs are difficult to locate or if there are disputes among family members.
Trusts are all the rage and for good reason. In general, you can avoid the probate court by transferring property to trust. When someone places property into a trust, they transfer ownership to a trustee, who manages and disposes of the property in accordance with the instructions in the trust agreement. Usually, in the case of a fully revocable trust (which means that the trust can be readily amended or revoked) the originators of the trust (called the “trustors” or the “settlors”) are also the trustees. In effect, the trustee in such a case manages his, or her, own money.
When you own your own property outright, you can obviously sell it, lease it, spend it, or save it. Depending upon how it is drafted, the same is true in the case of a settlor who places his property in a fully revocable living trust the property in such a case may also be sold, spent, or leased. For all practical purposes, the settlor in such a case still owns the property. However, when the settlor dies, his or her successor trustees take over management of the trust, passing the property to the beneficiaries and usually avoiding probate court. A revocable trust of this type, by itself, confers no tax benefit even though there are certain types of trusts, and estate plans, which sometimes can provide such benefits.
Like anything, there are pros and cons when choosing between a will and a trust. Most of the pros and cons relate to cost:
Depending upon the circumstance, trusts can provide similar benefits as certain types of conservatorships. If a settlor becomes unable to handle his or her own affairs, the successor trustee can step in and make the necessary decisions to manage the settlors’ financial affairs. Wills do not offer this benefit. However, if a person suffers from dementia, for example, a conservatorship “of the person” may still be necessary. There are benefits to each approach. Also, the law governing wills and trusts may vary from state to state. You should consult with a competent estate planning attorney to choose the right approach for you.
Do you have children, elderly parents, a home, or savings? If so, it’s important to have a plan for what will happen in the event of your untimely death or incapacitation. If you think that planning is only necessary for the wealthy with millions of dollars in assets, you should understand that most families need adequate protection after a loved one is gone. Here are some important things you should understand about trust and estate law.
Although it is always difficult to think about incapacity or death, the truth is that everyone will pass away, and it is better to be prepared rather than leaving your family caught off guard. Educating yourself about trust and estate law is a good start, and completing all of the necessary legal documents is the first step. Beyond documents, it’s also critical to make sure that your assets are owned in the same manner as detailed in the documents. You should also understand the beneficiary designations on your retirement accounts and consider whether you need life or disability insurance.
If proper planning is not done, your family will end up in probate court, which is expensive and time-consuming. The court gets the authority to examine your will, in addition to your heirs and potential creditors. The court takes over and decides how to distribute your assets and pay your creditors without your input.
In order to avoid the probate process, you can make specific beneficiary designations for specific assets. For example, you can say that your tax-deferred account or life insurance policy can go directly to the beneficiary that you’ve chosen. Another way to avoid probate completely is to set up a revocable trust. This allows you to transfer ownership of your assets to a trust that details exactly what happens if you are incapacitated or you die. Because this is all contained within one document, you do not need the assistance of a probate court.
Depending on your situation, for example, if you are married, or you have kids, family organization determines an entire portion of the process. After that determination is complete, it’s necessary to look closely at your assets and think about how to lessen the amount of estate taxes (if any) that your family will owe.
Considering that your financial and family situation can often change, you should review your plan at least once every five years. You should review your documents, how your assets are titled, your beneficiary designations, and your current objectives and goals. Think about your current situation, determine what would be the most beneficial for your family, and then update the plan as time passes. If you make it a priority to learn more about trust and estate law, you will have the comfort of knowing that you’ve done everything you can to protect your family in the event of your death or incapacitation.
Many people are uncertain if trusts are a necessary part of their estate planning portfolio. The answer is a resounding ‘yes’ because they offer advantages that cannot be obtained simply by executing a last will and testament.
Trusts are a vital factor in protecting personal possessions, financial investments, and business assets throughout your life and upon death. They are suitable for nearly everybody, but are of particular importance to business owners and people responsible for the care of minor children. One of the primary reasons for arranging trusts is avoid probate; the legal process used to settle decedent estates. Most often, the process extends for many months and prohibits heirs from receiving inheritance gifts in a timely fashion.
When probate extends for long periods the assets often depreciate in value. Furthermore, estate property might have to be sold to cover expenses related to the settlement process.
Probated Wills are vulnerable to legal litigation; especially if relatives’ dispute over inheritance property. Estate settlement can be extended for years whenever legal litigation occurs. The process can end up being so expensive that estate executors have to sell assets to cover associated costs.
The simplest way to avoid these types of problems is to transfer ownership of property and assets into a trust. Not only is property keep out of probate, assets can be distributed to heirs within a short time. Furthermore, strategies can be established to minimize inheritance and estate tax obligations.
Since trusts are used to protect everything a person owns it is advisable to consult with estate attorneys. Major problems can occur if trusts aren’t funded properly or if documents aren’t in order. Those who choose to go it alone ought to at least have lawyers review their estate plan to make certain it is legally-binding.
Another benefit of talking with lawyers is they can advise of the various types of trusts, along with the pros and cons of each. A few of the most widely used are living, revocable, children’s and family trusts. Each calls for a Trustor, Trustee, and beneficiary.